Tax Rebates: To Spend Or Not To Spend

(CBS)  Olga Barahona is right in the middle of the tax bracket President Bush is apparently targeting to deliver the jolt to the economy. She says $1600 would help.

"I would definitely pay off bills," she told CBS News correspondent Sandra Hughes. "I own a house and I definitely have things that come up."

President Bush is reportedly thinking about a plan that would give tax rebates to singles earning up to $85,000 a year and couples earning up to $110,000.

Olga and her husband, both teachers, together earn $95,000 a year.

"If we have the extra money, you definitely want to buy things," she says.

That's what the government is counting on. But economists are not recommending quick buying sprees.

"One, If you have high-interest-rate credit card debt or installment debt, pay that off," advises economist Ben Stein. "Two, if you can save it, save it. Three, if you absolutely have to spend it, buy something durable with it, like a freezer, a refrigerator, or a microwave oven."

Michael Franke, another teacher, says he'll sock his money away. But he thinks more needs to be done for the really needy.

"I think it's nice to have something like food stamps in there, which is designed to relieve misery -- and economic stimulus for the middle class," he says.

These teachers like the plan - and hope Wall Street likes it too. They say that they want their retirement accounts to stop hemorrhaging money.

[nadeane-2009]

I have one question about the rebate checks. Are we going to have to claim it as income on the following years income tax? That''s what happened when they had that child tax credit a few years back. They gave $400.00 per child. But the next tax year, we got a letter saying how much we had to claim on our taxes. So if they are going to give out checks. Why should we have to claim it as an income on our taxes?

[walmart1231]

hey finnally BUSH does something right. after us singles pay the bills.greetings from Billings MT.

[mkt189]

thank you Michael Franke. I was upset by Bush''s plan as there were not any references to helping America''s poor. How many more jobs need to be lost, how many more people need to freeze to death, the list, very sadly, goes on and on. I wish the goverment would help the ones who don''t have jobs instead of the ones that do. They already keep the economy moving. Let''t get the class of people that tend to be ignored on their feet, therefore creating a larger work force with more people to spend and strengthen the economy even more. I guess that would be too simple of a solution.